Do the Renters Reform proposals do enough to make the private rented sector fit for the 21st century?

Last week the Levelling Up Committee published its report on reforming private renting in response to the government’s 'A Fairer Private Rented Sector' White Paper, which lays the foundations for the long-delayed Renters Reform Bill (expected in the coming months). The Bill itself is a response to the three most pressing issues in the sector: security, conditions, and affordability.

Two of these issues - the ending of ‘section 21’ so called ‘no fault’ evictions and conditions - are the main focus of the government's reforms and are intertwined. (Despite the wide powers that local authorities possess to tackle poor conditions and the new laws about fitness for habitation most tenants are reluctant to complain because of fears that the landlord will serve notice and end the tenancy.) The Bill will also introduce for the first time a requirement for private rented homes to meet a revised and extended decent homes standard (DHS). If taken forward, these reforms will mark significant progress for private renters in terms of security and quality.

The affordability challenge

However, the measures proposed to deal with affordability are less convincing. Both the White Paper and the Committee approach this issue from one aspect – price, ignoring the tenant’s ability to pay (although this is partly because incomes fall within the remit of Work and Pensions). The Committee does acknowledge that this is ‘the most serious challenge facing private renters’ but this is rather an understatement when a recent report by Crisis shows rental evictions have surged by 98 per cent in a year.

Whilst limited, the measures in the White Paper to deal with affordability probably go about as far as they can without reintroducing rent controls. Under the proposals tenants will appeal to a tribunal if their rent exceeds the market rate without the threat of the tribunal raising it. The Committee link affordability with the lack of supply and explore whether the White Paper's proposals will make things worse as landlords threaten to exit the sector. It suggests two solutions: a review of tax incentives and a significant increase in building new affordable rent homes to 90,000 per year.

The impact of price on the issue of conditions is largely overlooked, although this may be because the link between the two – despite what we might prefer to believe – is weak. Price is largely determined by location not quality. The White Paper does, however, include several proposals to raise standards in addition to a legally binding DHS. These are:

• Working with local authorities to identify barriers to enforcement
• The introduction of a private rented ombudsman
• A new property portal.

Enforcement

A single Ombudsman for private renters and a portal to support private landlords to understand and fulfil their obligations, and enable tenants to hold them to better account, could be a game changer. The portal is, in effect, a compulsory registration scheme but designed for the online age. This is welcomed by almost everyone: for the first-time councils will have a map of all the private rented homes in their district. The minority that operate outside the rules will no longer be able to gain a competitive advantage on those that comply. The portal will also help cash-strapped councils to take a more strategic approach to enforcement and should help raise standards through competition by acting as a source of information for tenants seeking new homes. Crucial to its success will be the introduction of a unique property reference number (UPRN) which is being developed by the sector trade bodies.

However, the White Paper and the Committee’s assessment of it gloss over the much weaker resources available to councils for enforcement. AS CIH set out in its response to the reforms, many smaller councils have only a few full-time staff to deal with all private housing – including owner occupation. The White Paper side-steps this completely, while partnership working between central and local government is always welcome it is no substitute for adequate funding - as many of the local authority partners who gave evidence to the Committee testified. The Committee is somewhat resigned to this fact, putting its faith in self-financing through the collection of penalties. This rather puts the cart before the horse – councils need to employ staff first to ramp up the enforcement; not many will take the risk based on speculative projections about income from fines.

Rebalancing the tenant and landlord relationship? 

The headline proposal in the Bill is the abolition of section 21. The White Paper – perhaps to the surprise of many – developed this further and proposed to abolish all fixed term tenancies. This should help to increase tenant bargaining power from the current very weak position. Dissatisfied tenants can give notice being liable for rent until the end of the term.

The most contentious part of the reforms is arguably the extension of the mandatory grounds for possession. Both landlords and the Committee are rightly concerned about the capacity of the courts to expedite claims for possession for rent arrears and anti-social behaviour. Both call for court reform to precede the abolition of section 21 to give landlords confidence - many landlords cite their lack of faith in the courts as the main reason they plan to exit the sector, although some commentators are sceptical about the extent to which this will affect the supply.

The Committee’s preferred solution is to introduce a specialist housing court, though the government has already rejected this. A specialist housing court doesn’t of itself increase the courts capacity to process cases. Clearly what is needed is more resources for the courts' service, once again the White Paper was silent on this.

The White Paper and the Bill have the potential to radically transform the private rented sector and make it fit for the 21st century. For the first time in decades there is broad political consensus around what needs to be done. It would be a huge opportunity lost if it was undermined by the government’s unwillingness to support its own proposals with the investment in resources required to make it a success.

As a member of the Renters Reform Coalition CIH will continue to work with government and partners to help support the reforms needed.